Fixing Apple's Supply Lines

By NICK WINGFIELD; Steven Greenhouse contributed reporting.

Published: April 2, 2012

CORRECTION APPENDED

A day after Timothy D. Cook, Apple's chief executive, toured a Chinese factory where the company's products are made, an audit commissioned by Apple criticized the long hours and dangerous working conditions at plants run by Foxconn, the operator of the factory Mr. Cook visited last week.

In response, Foxconn vowed to reduce working hours and significantly increase wages at its factories.

Mr. Cook's appearance at a facility where Apple devices are made was an illustration of how differently Apple's new chief relates to an issue that first surfaced under his predecessor, Steven P. Jobs.

Since Mr. Cook became chief executive in August, shortly before the death of Mr. Jobs, Apple has taken a number of significant steps to address concerns about how Apple products are made.

When he became chief, many people wondered whether Mr. Cook, a skilled manager of Apple's operations, could ever rival the visionary influence of Mr. Jobs on Apple products. Instead, it appears Mr. Cook could make his earliest and most significant mark by changing how Apple's products are made.

''I want to give credit to Tim Cook for this,'' said Dara O'Rourke, associate professor of environmental and labor policy at the University of California, Berkeley. ''He's admitting they've got problems.''

Apple's supply chain is a subject much closer to Mr. Cook than it was to his predecessor. Not long after Mr. Jobs returned to lead Apple in 1997, he hired Mr. Cook to clean up the manufacturing operations, which were in disarray, with bloated inventory that hurt its profits. Over more than a decade, Mr. Cook helped transform Apple's operations into the envy of the electronics industry, with an array of partners, mostly in Asia, able to efficiently pump out its latest products.

In contrast to Mr. Cook, Mr. Jobs never visited the factories in China where Apple's products were made, according to two people with knowledge of the matter who declined to be identified to avoid antagonizing Apple.

During the years when he was chief executive, Mr. Jobs was never as directly engaged with Apple's effort to audit its suppliers as Mr. Cook was, according to a former Apple executive who declined to be identified. Still, when Mr. Jobs learned of the more serious violations of its supplier code of conduct -- instances where child labor was used, for example -- he was outraged, this person said.

Mr. Cook has spoken publicly of how his blue-collar roots growing up in Alabama gave him an early appreciation for factory work. ''I spent a lot of time in factories personally, and not just as an executive,'' Mr. Cook told investors at a conference in San Francisco in February. ''I worked in a paper mill in Alabama and an aluminum plant in Virginia.''

Some labor rights advocates, though, said they were not yet convinced that last week's report about conditions in Foxconn factories would lead to meaningful improvements for workers, saying that earlier promises of progress by Apple and its partners had not been fulfilled.

''It looks like a pattern I've observed before,'' said Jeff Ballinger, a global labor activist and researcher. ''It's a report to get you over and hopefully things will die down. It's not very convincing.''

Since 2007, Apple has published annual reports with the results of audits of factories where its products are produced. But in the last several months under Mr. Cook's watch, the company has taken a bolder set of steps to prod its suppliers into making workplace improvements.

In January, when Apple published its 2012 annual report on conditions within its suppliers' factories, the company also released the names of 156 companies that supplied it with parts and other services involved in the manufacturing of Apple products, something it had previously declined to do.

To help end excessive overtime work, it began publishing monthly reports on compliance with Apple's policy of a 60-hour workweek at its supplier factories. For the month of February, Apple said that compliance figure rose to 89 percent from 84 percent in January.

This year, Apple also became the first technology company to join the Fair Labor Association, and it invited the nonprofit global monitoring group to conduct inspections of its suppliers' factories in China and elsewhere.

Last week, the group published the results of its first inspections of Apple's supply chain, citing numerous violations of Chinese labor laws and regulations at Foxconn factories, including instances where workers exceeded the 60-hour workweek that is the association's standard.

Foxconn, which is based in Taiwan, promised that by July 2013 its employees would no longer exceed the 49-hour workweek limit set by Chinese law. Workers will not see a pay decline because of corresponding wage increases, Foxconn pledged.

In a statement, Apple said, ''Our team has been working for years to educate workers, improve conditions and make Apple's supply chain a model for the industry, which is why we asked the F.L.A. to conduct these audits.''

Apple has said it had made many improvements to factory conditions over the years. In 2008, for example, company inspectors discovered a situation in which a supplier had forced foreign workers to give up their passports to factory managers, effectively limiting their ability to leave their jobs. Apple demanded that the supplier, unnamed in Apple's annual report mentioning the incident, return the passports to the workers.

Other problems have been harder for Apple to eradicate. Even Mr. Cook conceded in his speech at the investor conference in February that Apple had consistently found that suppliers had violated the company's overtime policies.

Daniel Diermeier, a professor at Northwestern University who studies reputation management, says he believes the more aggressive stance by Apple toward factory conditions is the result of greater scrutiny of the company by media and advocacy groups, at a time when there is also intense interest in Apple's soaring share price and cash reserves. But he also believes Mr. Cook's leadership has played a role in the changes.

''I think he probably has a deeper understanding, and this is more personal for him than it might be for other executives,'' Mr. Diermeier said.

Some worker advocates say they are hopeful the changes that have occurred under Mr. Cook will lead to lasting improvements in the manufacturing of electronics products.

''They have an opportunity to become the new face of sustainable production in the electronics sector,'' said Meg Roggensack, senior adviser, business and human rights at Human Rights First, a nongovernmental organization. ''They're smart enough. They're well capitalized enough.''

PHOTOS: A Foxconn factory in Guangdong Province, above. Timothy D. Cook, below center, at another Foxconn site last week. (PHOTOGRAPHS BY BOBBY YIP/REUTERS; BOWEN LIU/APPLE, VIA BLOOMBERG NEWS) (B1); Foxconn has promised that by July 2013 its employees will no longer exceed the 49-hour workweek limit set by Chinese law. (PHOTOGRAPH BY AGENCE FRANCE-PRESSE -- GETTY IMAGES) (B6)

Correction: April 9, 2012, Monday

This article has been revised to reflect the following correction: An article last Monday about Apple's steps to address concerns about labor conditions at plants that manufacture its products misstated the timing of Timothy D. Cook's appointment as the company's chief executive. It occurred in August, not last fall.